Sudden rise in wage will 'hurt' industries

I find his explanation very good and simple, it’s a 33 minute video but it’s really good for your economic knowledge.

Some examples from the video:
Productivity must increase in order for company to maintain/reduce cost.

Direct Material + Direct Labor + Manufacturing Overhead = Product Cost

Increase in wages(Direct Labor) will lead to increase in cost.
Scenario on which productivity level remains the same.
RM100 wage to produce 100 pens = RM1/pen
RM120 wage to produce 100 pens = RM1.2/pen

Scenario in which productivity level increases.
RM120 wage to produce 120 pens = RM1/pen
Therefore, cost is maintained.

It will have an impact on export as well if product cost increased, unless productivity is increased.

Impact on FDI due to increased manufacturing cost.

Cost of everything(basic necessities and luxury goods) will increase if productivity doesn’t increase. Resulting in Inflation.

[size=150]Manufacturers want more time for minimum wage[/size]
KUALA LUMPUR, March 6 The manufacturing sector wants the government to give it time and assistance in increasing productivity to match wage increases under a proposed minimum wage of up to RM1,000.

Sixteen manufacturing associations told reporters today most small-medium enterprises (SME) only had a profit margin of three to five per cent despite paying basic wages as low as RM650 per month.

They said that they could increase their wage bill, which made up an average of 15 per cent of manufacturing cost, only if it was matched by productivity gains. … imum-wage/

example: big boss fleet of Mercedes and RM 3 million home will become>>>???

take a guess

but Eugene, think of this…

if price of food and all necessities keep increasing but wage no increase…
what will happen?

economic knowledge? More like public scam.

reduce tax then .
we all notice once the barisan lembu budget come out next month all the foods, service, goods price all went up. but our salary not yet increase.
the rich will become more rich , the poor will be poorer that’s the fact.

[quote=“rabbit75”]reduce tax then .
we all notice once the barisan lembu budget come out next month all the foods, service, goods price all went up. but our salary not yet increase.
the rich will become more rich , the poor will be poorer that’s the fact.[/quote]

have to sadly agree with this

Don’t be misled. The issue is about “Minimum Wages” and not the cost of labour.

example contract of labour at cost 35 perhead . 35 x 26 days = 910
if min wages at 800 ,my boss can close shop lo. consider we provide supervisor, 30days credit, socso, transports. all this is the cost of operation.

Of course it will hurt industries. BN songlap money for a very long time and leave country debt up to RM 400 bil.

Let me put it in another way, which many an employer will not like to read/hear.

Minimum wages is to prevent the exploitations of the labor force ( the lower/lowest level of workers ) and not aimed at hurting any industry except those that employed “slave labors”. Sorry, the truth hurts.

what happen to millions/billions in profit then?

Maybe bro Mevotex can share with us his knowledge :smiley:

there is no definite answer, which role you want me to play? the employer or employee? 8)

Both :smiley:

Especially the country’s economy (Malaysia to be specific) :roll:

He actually explained what most economic books dictated - correlating productivity with wages.

Wages in Germany is very high, but this is compensated by high labor productivity - that’s how German industries can still compete around.

Many are divided on this wages thing - how should it be fixed? in what level? Low wages is both good and bad for businesses & industries:

  • good because they will be more competitive with cost of production decreased ,
  • bad because people’s purchasing power will also be low, less buying.

Striking a balance in between is always what all governments in the world have been trying to achieve.

As for economy of Malaysia, low-cost manufacturing is no longer an option due to competition from China, Indonesia and Vietnam. I believe the Malaysian government knew that, and since 1990s had been trying to diversify into IT manufacturing and heavy industries.

Though Mahathir had his flaws, he did successfully steered Malaysia into a leading exporter of semiconductor devices, electrical goods and ICT products in 1998. His attempt to branch out onto heavy industries however, did not go far, as Malaysia simply lack skilled workforce and the required technological expertise to support it, Malaysian domestic car Proton, for instance, faltered in foreign markets. He also alienated Singapore, whom otherwise can be a good economic partner, Singapore went for Thailand instead.

The rise of Taiwan and South Korea threatened Malaysian IT manufacturing industries. After years of intensive investment (in technical education, R&D), Taiwan and South Korea successfully built up high-tech industrial base with sufficient talented labors to work on it, transforming themselves into world’s leading IT and electronics hub.

Amid competition, Malaysia retreated from IT manufacturing (though it still has considerable IT industries) into service-based industries like Islamic banking and tourism, to which it succeeded in.

The country though, is fortunate to be blessed with vast resources. It has a strong resource-based industries like petroleum, timber & wood products, rubber, palm oil. To a lots of foreign observers and investors however, Malaysia seems to lose its economic direction from 2008 onwards, where its government no longer lay out a clear economic vision.

Analysts say perhaps Malaysia needs time to re-evaluate the rapidly changing economic environment in ASEAN, where Indonesia and Vietnam have become industrial powerhouse, Philippines becomes an IT outsourcing center, Singapore a financial and high-tech hub, and resource-rich Myanmar is opening up.

Sudden rise in wage for certain only.should consider private sector also.all the price hikes faced by all,not only for those under gvrnmnt servant.

personally think minimum wage only used by certain party to collect more % of money from both employers and employees. don’t you guys think so?

mandarin has a phrase translated as “the word of work doesn’t stand up at all” does give us a raw idea about the lacking life of a employee.

but i think, minimum wage + bonus on completed tasks is a good combination.

said, the minimum wage is RM 900.

Each completed task for example is RM 1.

if 1 day can finish 25, that’s RM 25 yield up of RM 1450. not bad though (this is factory job and the factory is in malaysia)

honestly, employees does become lazy if his salary is very close to his expectation (not her :smiley: ).

i see minimum wage in Australia and the economy and quality of life is booming like hell.
everyone has a swimming pool in the backyard!